Apple case thrown out of court in fight over in-app purchase patents

Apple’s attempt to defend its third party developers from patent trolls has been thrown out of court by an East Texas judge, ending two years of litigation between the company and litigious patent-holders Lodsys.

Judge Rodney Gilstrap threw out Apple’s attempt to prevent Lodsys from suing small developers without considering the motion, having allowed the patent-holders to settle all cases, a move which rendered Apple’s claim moot.

In 2011, Lodsys began offering out-of-court settlements to small developers whom it alleged had infringed one of the many patents it holds, which it claims cover the concept of in-app purchasing.

Those demands were small enough (at 0.575% of revenue) and the costs of litigation high enough that most app developers didn’t fight back in court, ensuring that Lodsys never ran the risk of its patents being invalidated.

Apple saw those lawsuits as a threat to its developmental ecosystem, and brought a legal challenge against the company. It had licensed the patents itself, from their previous owner, a company called Intellectual Ventures, under terms which, Apple claimed, gave it permission to offer licensed products and services to customers and partners.

The computer giant’s most recent motion in the case, filed on 18 September, argues that “Lodsys’s purpose is to buy time in which it can continue to hold up iOS-based app developers for settlements of claims that Lodsys knows it has no right to assert”.

Apple also claims that “judicial economy” is served by allowing its case to be heard, because a victory by it would prevent the rest of the cases from going ahead, thus “reducing the potential burden… of countless claims against Apple iOS-based app developers”.

The American executive offered a package of measures including increased transparency as to who owns patents, tighter requirements to explain how a patent accomplishes its task when filing, and “providing [consumers and businesses] with better legal protection against liability for a product being used off-the-shelf and solely for its intended use”.

That last recommendation requires congressional support to pass, and has seen little progress since it was proposed.

Apple’s loss against Lodsys is the second hit the company has taken over patents in a weekend. A German court has ruled that a patent on touchscreen photo managing is invalid because Steve Jobs had demonstrated the invention in action before the patent had been filed.

The patent is one of a family on the bouncing effects in iOS, but when Jobs demonstrated it on stage in 2007, it had not yet been filed. In the US, inventors have time between making an invention public and having to file the patent, but no such protection exists in Germany.

As a result, Apple’s own demonstration was used as prior art, proving that the innovation existed before a patent was filed on it.

• This article was amended on 2 October 2013 to clarify that Intellectual Ventures is not the parent company of Lodsys